TWO per cent of adults on the planet command more than half of the world's wealth, while the bottom 50 per cent possesses just 1 per cent, according to comprehensive new research.

While income is distributed unequally across the globe, the geographical spread of wealth - which includes property and financial assets - is even more skewed, the study by the World Institute for Development Economics Research of the UN University showed.

"Wealth is heavily concentrated in North America, Europe and high-income Asia- Pacific countries. People in these countries collectively hold almost 90 per cent of total world wealth," the survey said.

The Helsinki-based institute said this was the first global research on the topic, for which there are only limited data. The study is based on figures from 2000. According to the report "the same degree of inequality would be obtained if one person in a group of ten takes 99 per cent of the pie and the other nine share the remaining 1 per cent.

...The two most asset-rich countries are Japan and the United States. In the US, average wealth amounted to £72,800 per person in the year 2000, and £91,500 in Japan.

In India, the figure was just £560 and in Indonesia, per capita wealth was £710.

Even among high-income nations, the amounts vary, from £18,700 per person for New Zealand and £35,390 for Denmark to £64,200 for Britain.

Although North America has only 6 per cent of the world's adult population, it accounts for 34 per cent of household wealth."

If you're reading this and saying, well, shit, I live in North America/Britain/wherever and i don't -feel- rich, you might be right:

Still, many in the wealthy West are house-poor, with assets well below this number due to mortgages and other debt.

"Many people in high-income countries have negative net worth and - somewhat paradoxically - are among the poorest people in the world in terms of household wealth," the report said.

Let us take some accepted, indeed indisputable, facts. One, the combined wealth of the world’s three richest people is greater than the total gross domestic product of the 48 poorest countries.

I'm going to just pause and let that one sink in before going on. I don't know about y'all, numbers and statistics and so forth tend to make me glaze over; but this one, well,

Let us take some accepted, indeed indisputable, facts. One, the combined wealth of the world’s three richest people is greater than the total gross domestic product of the 48 poorest countries.

Okay? Okay. Moving on:

Two, in 1960, the average income of the richest 20 per cent of the world’s population was 30 times higher than that of the poorest 20 per cent. By 1995, this had become 82 times greater (United Nations Development Programme Report 1998). Three, in 1970, the gap between the per capita GDP of the richest country, the United States of America ($5070) and of the poorest, Bangladesh ($57) was 88:1. In 2000, the gap between the richest, Luxembourg ($45,917) and the poorest, Guinea Bissau ($161) was 267:1.

That article goes on to lay out the most common responses to these figures, by what they term "neoliberals," i.e. defenders of the current economic model: "growth," "free trade," "globalization," deregulation, that sort of thing, one presumes. Apaprently they boil down to, "well, you have to break eggs to make an omelette" and "lies, damned lies and statistics." (My own somewhat flip reading: read the article for their own words and citations).

*****

But so okay; maybe at this point you're thinking, well, the entire world, that's a bit abstract; global village, schmobal village, I live -here.-

Well, let's assume for now "here" is the U.S., as it is for me and it is for a goodly chunk of y'all reading me here, based on my stats (more numbers!), if obviously not all of y'all.

So, here we go.

From United for a Fair Economy: this is a chart roughly breaking down the rise of income for Americans, divided by relative wealth into five chunks, (with an extra category for the top 5%; you'll see why in a minute) from bottom to top, during the "boom years," the "wonder years," 1947-1979.

As you can see, here in fact, at least within the bounds of this country, it probably is as fair as it ever is to have said that the "rising tide lifted all boats." In fact, the relative income of the bottom 20% rises by more than does the top 20%. (by 116% and 99%, respectively). And within that top 20% sector, the wealthiest 5% income rises by--percentage-wise, you understand, they're still the "wealthiest 5%"--even less, but still a healthy 86% increase, overall. Okay.

Now, this is the chart they have for 1979-2001: (yes, this is including the golden Clinton years, it would seem):

So, bottom quintile (that's a great word, isn't it? "quintile") income rose in those 22 years by...3%.

Wealthiest 20% of the U.S. pop's income rose by...53%.

And the richest 5% of the population's income increased by...81%.

Oh, apparently this is before taxes. After taxes, it breaks down like this:

So, relatively speaking, the bottom 20% does a little better than before: 9%. On the other hand, the top 20% makes out at a 68% increase, over the years.

And the very richest 1% sees an increase of income of 201%, from 1979-2001.

Now, "income," (what you earn) as we know, is not synonymous with "wealth" (what you have).

Here's the chart for how that breaks down as of 2001, mkay:

Yes, you're reading that right, assuming I am and you're reading it as I'm reading it: the wealthiest 1% of the U.S. population--so, what, about 3 million people or so?--between them, own just about exactly one third of ALL the "wealth" in the country, as estimated by and how whoever estimates such things (approximately $43 trillion dollars).

And, while this particular chart doesn't say so, I am willing to bet--and will back this up, later, if i find the stats--that of that 1%, a much much small percentage owns a relative even huger chunk of that. Without the actual figures, I won't swear that the wealthiest .1 or .01% of the population own more than even the rest of that top 1% put together, but it wouldn't surprise me either.

also remembering, again:

Let us take some accepted, indeed indisputable, facts. One, the combined wealth of the world’s three richest people is greater than the total gross domestic product of the 48 poorest countries.

So. Of the remaining 2/3 of the wealth--money, "goods," property, stock, what have you--of the U.S., according to the above chart, HALF the country--the poorer half, natch--has to divide a mere 2.8% between them. So that's, what, 150 million people, give or take? and 3% of 43 trillion bucks...christ, I don't know. All I do know is: it's a lot a LOT less than what the richest 3 million or so own all by theyselves.

(of course, that is slightly better, percentage-wise, than the stats for the ENTIRE WORLD, as we've seen; in which half the world (i.e., what, 3-4 billion people?) share between them 1% of all the wealth in the world.

And then, the so-called middle class--the next 40%, so, you know, of the people who aren't in the bottom half, all but the top richest 10% of the population--they get a bit more than a quarter more, of the wealth, between them.

The remaining chunk is divvied up between what i guess would now be the, well, I don't know how you'd "class" people according to this chart; my guess is that a lot of 'em, this top-10-except-for-the-very-richest-1% of the population, still think of themselves of middle class--as do a lot of people in that lower 50%, because everyone in the U.S. is middle class, you know? There is no such thing as "class"--

--anyway, that lot, the wealthiest-except-for-the-very-tiptop, shares somewhat more than another third of the country's entire wealth between them. Surprise surprise, the richer half of -that- strata has more than twice as much as the rest of 'em.

(Speaking of pre-1980's; anyone else remember this bit from Sesame Street? "Let's share a banana, Ernie; I'll have the banana, and you get the peel!" perhaps i misremember; i was but a babe. anyway Bert is Evil, as everyone knows).

*****

Okay, so, but what does that mean in terms of actual dollars, currently?

1. Profits are up, but the wages and incomes of average Americans are down.

Inflation-adjusted hourly and weekly wages are below where they were at the start of the recovery in November 2001. Yet, productivity—the growth of the economic pie—is up by 14.7%.1 (

...Consequently, median household income (inflation-adjusted) has fallen five years in a row and was 4% lower in 2004 than in 1999, falling from $46,129 to $44,389.

2. More and more people are deeper and deeper in debt.

The indebtedness of U.S. households, after adjusting for inflation, has risen 42.0% over the last five years. The level of debt as a percent of after-tax income is the highest ever measured in our history. Mortgage and consumer debt is now 120% of after-tax income, more than twice the level of 30 years ago. The debt-service ratio (the percent of after-tax income that goes to pay off debts) is at an all-time high of 13.9%. The personal savings rate is negative for the first time since the Depression [emphasis mine]

3. Job creation has not kept up with population growth, and the employment rate has fallen sharply.

The United States has only 1.9% more jobs today than in March 2001 (the start of the last recession).

Well, but, see, there is growth! Growth is good, right?

Private sector jobs are up only 1.5%. At this stage of previous business cycles, jobs had grown by an average of 8.8% and never less than 6.0%.

...oh.

The unemployment rate is relatively low at 4.6%.

...yay?

But the percent of the population that has a job has never recovered since the recession and is still 1.3% lower than in March 2001. If the employment rate had returned to pre-recession levels, almost 4 million more people would be employed.

and, I don't have the cite here, but there've been studies that indicate the reason unemployment is "down" is because they're simply going by the people applying for unemployment, on the welfare rolls, on record as actively looking for work, you know. It doesn't take in that in fact a lot have people have simply given up. or fallen, and can't get up.

On Saturday, we broke the record for the longest period without an increase in the minimum wage since it was established in 1938. The prior record of nine years and three months lasted from Jan. 1, 1981, until the minimum wage hike on April 1, 1990.

That current federal minimum wage, in case you didn't know, is $5.15 an hour. And has been since 1997.

Some state laws have an increase beyond that--I think here in NYC it was 6 bucks, may've been raised recently; on the other hand, and this is going to have to be another one where i don't currently have the cite, but in just a bunch of states, don't know if you knew, they can pay you less if your primary income is deduced to be via tips. As in, waitroning, etc. Two something an hour, was it? I do need to look that one up. I remember that, because there was something or other about how someone recently was trying to push a federal bill to override the few states that had provisos that insisted on the full minimum wage for everyone, not just those who get to collect coins and singles from the ashtray. Guess which party. Hint: it's the same one that, (via the same Courant article), wanted to simply do away with the whole thing:

Murray Weidenbaum, chairman of President Reagan's first Council of Economic Advisers, has acknowledged they wanted to eliminate the minimum wage. But as The Wall Street Journal reported, "Because that would have been such a `painful political process,' Mr. Weidenbaum says that he and other officials were content to let inflation turn the minimum wage into `an effective dead letter.'"

Today's minimum wage is less than the 1950 minimum of $6.28 (adjusted for inflation), according to the Bureau of Labor Statistics inflation calculator. It takes nearly two workers to match the $9.28 buying power of one minimum wage worker in 1968.

So what that means is,

A full-time worker at minimum wage makes just $10,712 a year - less than $900 a month to cover housing, food, health care, transportation and other expenses. Today, family health coverage costs more than a minimum wage worker's entire annual income.

The minimum wage sets the wage floor. As the floor has sunk below poverty levels, millions of workers find themselves with paychecks above the minimum, but not above poverty wages.

Which means:

CEOs have enriched themselves and their families for generations to come while workers struggle to support themselves and their children. The highest paid CEO in 1968 made as much as 127 average workers and 239 minimum wage workers. The highest paid CEO in 2005 made as much as 7,443 average workers and 23,282 minimum wage workers.

...average CEO pay in Business Week's survey was $7.4 million. It would take 241 years for an average worker paid $30,722 to make that amount.

Since 1980, average CEO pay has skyrocketed 442 percent, adjusting for inflation, from $1,364,524. Average worker pay has inched up just 1.6 percent from an inflation-adjusted $30,244 in 1980.

...If average worker pay had grown at the CEO pace, it would be $164,018.

And while, as noted way the hell back up there, this growing disparity is a global problem, it is also true that the U.S. is even worse about this growing gap than other "First World" countries in many regards. From the above article,

According to the Towers Perrin worldwide pay report, U.S. CEOs are paid more than twice as much as Canadian CEOs, nearly three times as much as British CEOs, and four times as much as German CEOs.

Ireland's minimum wage is $10 and England's is more than $10, calculated in U.S. dollars.

Now, (also from the Courant) Democrats promise to pass a minimum wage hike in the first 100 hours of the new Congress. The long-delayed Fair Minimum Wage Act would raise the minimum wage in three steps to $5.85, 60 days after passage, $6.55 one year later in 2008, and $7.25 one year later in 2009.

Which, yay, okay. The AFL-CIO has a calculator you can use to work out how far you'd get on the minimum wage, based on how many hours you work and your monthly costs (it's a good exercise for personal budgeting, anyway if you don't already do such things). So now, i guess, instead of plugging in $5.15 an hour, you can plug in $7.25 an hour. In two years, I mean.

These are steps in the right direction for workers for whom every dollar counts in the struggle to make ends meet. But workers should not have to wait until 2009 for a $7.25 minimum wage that only partly restores buying power lost since 1968.

As they (Courant again) say.

And that's not even getting to the crap about, o, transnational corporations, effects of globalization...

*****

I'll be honest. I had a bunch of reasons for not tackling this shit before; dunno if they're the same as y'all's or not. Well, one, I suppose relatively speaking I am comfortable enough to sort-of pretend this isn't actually happening (although denial works in mysterious ways, doesn't it); certainly more so if you factor in my family background, who by now i expect is in, oh, i don't know what percentile, but i suspect it's up there. Not in the supra-wealthy micro-fraction percentile, no, but...and especially globally...so.

Somehow, you know, call it a hunch; i have the feeling that even if I, we, most, all? of us? don't start concerning ourselves with this shit pretty soon?

It's gonna concern itself with us.

I mean, the rest of us; the ones who aren't already reading this and going, um, HELLO? film at eleven?

And, I suspect, even those of us who aren't currently calculating whether to buy soap or toilet paper (because it can't be both), seriously freaked out about keeping the lights on, food on the table...it takes its toll, in ways probably not thought about at the conscious level. This Alternet article puts it well, I think:

Contra the right's liberal media conspiracy theories, the major media from across the spectrum are reporting the good news about America's booming economy with zeal.

That endless drumbeat comes with social costs.

First, it fuels the bubble mentality. If the economy's going gangbusters but you're struggling, of course you want to get in on the latest billionaire-creating wealth machine. That mentality infected anyone who bought tech stocks in 1999 hoping to become a "dot-com millionaire," just as it has them running around today buying houses at any price with the expectation that they'll get a 10 percent annual return. Alan Greenspan characterized the mindset as being one of "irrational exuberance." But what could be more rational than piling onto the latest bandwagon after watching a half-hour of CNBC's economic triumphalism?

Less easy to quantify is the psychic cost this has on us. The message we get all the time is that our unrivalled, dynamic economy affords opportunities for us all. So, if you're one of the majority who is not doing so well, it must be your fault. It is you, and not any external economic factor, that is keeping you from profiting from the Ownership Society. You are a loser.

...Despite our great wealth, we're an unhappy people; we lead the world in mental health problems year in and year out. It's impossible to know to what degree that results from failing to live up to the economic expectations drummed into our heads every time we hear about the wonders of the American economy. But the message to all those families struggling to get by should be: You're not alone, it's all of us.

*****Dennis Moore:What did you sing?

Singers:(speaking)We sang... he steals from the poor and gives to the rich.

Dennis Moore:Wait a tic... blimey, this redistribution of wealth is trickier than I thought.

13 comments:

Belledame, two of the figures in this post are a bit off because they use international exchange rates instead of purchasing power. Although in terms of international exchange rates the British minimum wage is $10/hour, in terms of purchasing power it's only $8/hour. However, Britain's national income is also 20% less than the USA's, so in percentage terms the US can go up to $10/hour without trouble (which is indeed what I advocate - screw $7.25).

The other is about global disparities. In terms of purchasing power, the poorest country in 2004 was Sierra Leone, at $561/year, and the richest was Luxembourg, at 125 times as much ($69,961).

Excellent post. Some of the figures may actually understate the immensity of the problem because they're based on household incomes, and if they go back to the 1960s and earlier you're comparing predominantly single-paycheck households then with a higher percentage of double-paycheck households today.

Belledame? I totally heart you. Thanks for braving the numbers and posting this.

It IS about class, in this great classless nation the U.S. of A. Perhaps it's "unAmerican" for me to feel this way, but as times are getting harder for moi I get even more pissed knowing it is my whole class, not just me. Somehow I think I'd feel better if I just thought it was my own bad luck. But it's not.

The systemic nature of our increasing poverty makes me want to do major damage to somebody, I ain't namin' who. Grr...

In New York, that wage is about the bare minimum. I have no trouble living on $20,000 a year in Manhattan, but I'm pretty sure my rent is university-subsidized to some extent.

The main problem with these schemes is that it's wrong to assume poor people work full-time year-round. Unemployment and underemployment strike the poor the hardest.

What I'd be most comfortable with is a Swedish-style minimum income, where if you make less than the poverty rate, the government will supplement your income (it's less expensive to the taxpayers than it sounds).

Speaking of class in the US, the US has the second lowest level of intergenerational income mobility in the first world (and mobility is especially low for black people, even when controlling for factors like level of education).

As a long time Euroweenie socialist these sorts of glaring inequalities are not news: they are the reason for our huge protests at every G8 summit. So I posted the link rather glibly assuming it was recieved wisdom.

From a European perspective it does sometimes seem as though America is living in its own self-created bubble and doesn't see or even want to see the self-created potential wave of global misery headed its way and which according to your figures, is already lapping at American feet.

Schadenfreude,though tempting, is pointless at this late stage because we're all affected by this new reality of resource wars, declining quality of life and a fucked-up planet.

Every day on the streets of Amsterdam I see people from all over the world who've had to flee for whatever reason, economic, climatic or political, from their home countries, largely as a result of the rampages of international capitalism and the arms trade.

And every day drowned young Africans wash up on the shores of Italy and Spain, or Eastern Europeans and Asians asphyxiated in containers at Dover or Calais, desperate to get away from grinding poverty and warfare. So far the US has been insulated from many of the worst effects of global capitalism like these, but not for much longer. If not for posts like yours about the way the current economic model affects Americans personally they'd never know it's happening till it's too late. Is there ny reporting of this on US TV?

You'd be surprised at the goodwill that's still out there though: we still don't hate Americans per se, despite Iraq, despite everything - we know you're just like us. Mostly.

We just loathe what the guzzling juggernaut that your nation has become is doing and the way it's driving the rest of the world into poverty to fuel its own temporary comfort and prosperity and its insane competition with China and India.

BTW, I'm British, and Britain is as prime an offender as the US. Our government talks about tackling global poverty, but Brown & Blair's Britain's right in there hoovering up capitalism's crumbs, making money from moving all the money around, all the while applying free-market US business models to public services like the NHS and water supplies and being one of the biggest arms traders on the planet. Oh, and don't get me started on the GATT agreements...

We're also completely exasperated by your media and governments' refusal to see the looming danger -even when the facts and figures are staring them in the face - because it doesn't fit the mythical national narrative they've constructed, of ever expanding profits, military glory and boundless influence.

Unfortunately for that narrative and those who still beleive it, so far history is heading exactly in the way Marx predicted.

How angry are the American people going to be when they realise this and that they've been had? Will they even realise it? And if they do how will that angry realisation manifest itself, if at all?

I think all bets are off on what happens in US and consequently global, politics in the next 5 years. Events are moving so fast now any prediction is contingent. The rollercoaster is accelerating.

Is socialism the answer to such gross inequalities? Revolution? What? Is it too late already?

I don't bloody know, I'm just a blogger. But at least some of us are attempting to create some equity even if it's only by making the current obscene situation better known.

But whatever your politics, surely our common humanity says that such massive inequalities as these are totally unjust, unsustainable and something has to give globally, and soon.

This stuff is too dry for our media to cover and saying it's a bubble is a good description. We assume everyone is just like us and when we find out that they aren't we also assume that the poverty is their own fault (just like it is for our own poor).

My husband and I talk about the lie of free trade all the time. They are supposed to be passing on the savings from things like off-shoring to the consumer and to the remaining workers, but does anyone see it or do you just see corporate executives and stockholders continue to enrich themselves at the expense of everyone else? They're doing a damned good job of returning us to the 19th century.

It isn't even only the money. Deregulation means that we are less safe, and we have less opportunities to litigate when big business does harm. If you are paying attention you see the pro-business/anti-consumer and anti-worker things they slip into laws. You've also seen that Bush has installed pro-business cronies into all of the governments regulatory agencies, the ones who are tasked with protecting the American people, but now sit on their hands and otherwise undermine regulations meant to protect average Americans.

Excellent post, belledame, and the comments are great and informative as well.

I was discussing something like this with a person on a blog... they'd written about some sort of economic thing, can't remember what, and in comments said something to the effect that they were aware that when the waters start rising, black and other minority groups often feel the brunt of it first. Especially as people, in effect, step on the heads of others to keep themselves above water.

Which is true, of course... but I tried (probably not too successfully) to convey the thought that... that state of affairs is pretty much the status quo. No surprise or anything. But something about what is going on now feels far different... it's not so much that the waters are rising as it is that the normally somewhat floating people are now sinking. Which, in my opinion, is a far more dangerous situation.

(and thank goodness I'm done with that metaphor... I think I made it all the way through without messing it up.)

From a European perspective it does sometimes seem as though America is living in its own self-created bubble and doesn't see or even want to see the self-created potential wave of global misery headed its way and which according to your figures, is already lapping at American feet.

Definitely. This is simply completely and totally inconceivable to many, no matter what the signs are, or what little news we get of the effects of our national or international policies, or anything like that. It just cannot happen, you see.

One of my favorite sayings is an Arundhati Roy quote (from memory, may be slightly different):

Another world is not only possible, she is on her way. On a quiet day I can hear her breathing.

Sometimes people I quote that too love it, but still surround it with a bubble and a very insular application - "Right! Bush will be gone, Democrats will take over, things will be better!" ... so to speak. Possibly due to unfamiliarity, it's not always taken into account that Roy is Indian, that a great portion of what a friend of mine calls the "Majority World" - as that is actually where the most people are - lives in grinding poverty, in often manufactured chaos and warfare, and that for a new world to come for them means that things would most likely change quite a bit for us (I am including rich, mostly Western nations in the "us", not just the US).

Great post. Yesterday, we had a professor from Brown University who was an expert on welfare give a lecture about the US welfare system and how it works, and the things that really struck me were that one, we don't really do cash assistance anymore, it's all about programs to help alleviate barriers to employment, so it doesn't really help poverty so much as help people get (usually crappy) jobs. Also most of these programs are located in more AFFLUENT communities in the suburbs (for a lot of reasons), hence they're difficult if not impossible for poor people to get to (especially since a lot of them don't have cars). Word verification: uoguchb, which sounds like an appropriate curse word.

A day late. From which we may infer a dollar short. The very term 'wealth' serves a fourfold ideological function here, doesn't it?

To make it sound like people have it, when you (not you, the them that said it) are describing how they don't have it. "Wealth' is everywhere, just variably.

To suggest that the money is my bank account is just the same as the money in Bill Gate's account. And that the house I own is just like the corporate facilities he owns. The only difference being how much. Except I have to use my money to pay my bills, and he uses his to pay people to do work he gets rich on.

And (third function) to suggest that everyone in the world lives in the kind of relationships to things and people where 'wealth' is a meaningful notion. Although the 'free trade' process works mainly to impose the legal froms ond institutions of property and 'wealth' that you need for corporations to operate on people who reproduce themselves and their societies in ways incompatible with the the rule of 'free trade' law.

And finally to suggest that there is a growth of individual massive fortunes somehow distinct from the the increase in size of corporations. As informative as it is to see here how many of these 'wealthy' people there are, in relative terms, and how much 'wealth' they have in absolute terms, how much more informative would it be to see who they are and what form their 'wealth' takes.

'Family' and 'household' are similar verbal camoflages, adopted for this kind of reporting during the Carter/Reagan era when wages took a huge hit, and have never really recovered. The increase of 'wealth' for the 'wealthy' means bigger corporate returns and lower tax rates. The increase in 'wealth' for 'households' means two people working to make a little more than one person used to.

At the next layer deeper than the descriptive terminology, what all these figures show is capital organized into larger and increasingly larger, in fact massive, corporate entities, and their correspondingly increased political and social power.